Comment by southphillyman | Hacker News Reader

Comment by southphillyman | Hacker News Reader

Interesting. About a year ago JPM sent me a link to a HackerRank (or something like it) session with a couple of dynamic programming problems in it. It was late at night and I didn't know what to expect. To my surprise the webcam turned on and started recording me (I was shirtless). I panicked and shut down the session expecting JPMorgan to bypass me for quitting the assignment. Lo and behold they still wanted to move forward and I eventually was offered after an onsite. I declined because I had a better offer from another bank and the environment at JPMorgan seemed very worker bee'ish. I would be working in that massive new building right now, 2000 developers at 1 site in Delaware sounds exceptional to me.

Wall Street/banks get a bad rep for a lot of reasons but you can still do "modern" development at some of them and the pay is not bad for the east coast. The project JPMorgan was hiring me for was "modern java" fwiw. I'm currently at a bank doing full stack "modern java" of the JHipster variety essentially (Spring boot, java 8 , angular 2).

> the pay is not bad for the east coast

Do they still insist on a mediocre base salary with completely not guaranteed annual bonus lump sum?

If you are a trader this makes perfect sense, but I've never quite understood it for programmers.

They still do unfortunately. New grad salaries at tech divisions in the banks are low relative to the tech companies. The bonus is again significant if you have more exp.

Not sure about new grads, but experienced compensation can vary. Not unusual for sr. devs to get $200k+ in places like Wilmington DE. So I imagine the packages in Manhattan are on par with SF tech giants if they want you bad enough. My bonus last year was significant given the fact I was only employed there for 1 or 2 eligible months, so I have high expectations this year. I worked at a mutual fund company as a contractor and the employees claimed to get bonuses of $30k+ and this was for testers and normal rank and file...not even developers.

I live in Wilmington de, and intervewed with a number of the banks. It was a chore to get them to talk above 100k. Any more info on those rates?

I can believe that. JPM wasn't really eager to meet my other offer (firm not in DE). 2010ish I worked in DE on a team where the majority of Sr/architect guys were getting 200K+ for basic Java/Spring/Hibernate stuff. They were recruiting nationally and bypassed alot of candidates during interviews fwiw. It may depend on the particular project.

Wow, that sounds great for that area. What skill sets do you have, and what were they looking for?

200k+? Does DE have state tax? What's the cost of living there? That's a fantastic salary for the Bay Area as well which already has inflated salaries to make up for the high cost of living and general high amount of talent. What technologies?

It makes sense when you think about their business - because banks are extremely pro-cyclical, they need an 'out' to reduce compensation when their profits blowup or economy turns. Easiest and quickest to drop bonuses.

Do it to the traders then, not the programmers.

[edit] Saving 10K on a programmer, even multiplied over 1000 programmers isn't going to amount to a hill of beans in a crisis where the bank is at risk. My suspicion is that tech management at banks have adopted this system because they're failed middle managers and it helps them pretend that they're BSDs with the ability to swing pnl.

My suspicion is that any time someone's analysis of a situation requires them to say "$GROUP is just bad at their jobs," that analysis is biased at flawed at the deepest levels.

Or it could be experience speaking: I worked at one of these banks for a decade, and was distinctly unimpressed by the caliber of technology management.

You can't generalize your experience at "one of these banks" to all management at all banks.

Bizarrely, I'd rate the one I worked at as best in class as far as tech management goes.

To back this up, I can draw on the experiences of my friends and former colleagues across the Street, and a large number of hair-raising interviews at other banks that made me repeatedly wonder why I would trade in the devil I know for a dumpster fire.

At the end of the day though, "the best in class" is still not "good".

The issue is that the same argument made for programmers can be made for back office & middle office as well, which when added up are much more than 1000 programmers. I agree that the bonus:salary ratio should increase drastically for trading/sales vs other roles, but for corporate culture/uniformity and practical business (need to quickly reduce costs) reasons it's done this way to some degree.

I have extreme views about the existence of middle and back office personnel at banks as well. But that's another discussion for another day.

Based on your and scott00's reply, it sounds like the "giant bonus" is a way to skirt the rules regarding taking money from investors (and turning employees into such).

I guess it's better than the "unfunded pension because they don't come due for 50 years when we'll be totes making bank" approach...

If you are an ATS it would make sense. I interviewed with a hedge fund most of your money was bonus.

Wow, what a sucker deal. Who on earth are they managing to pull in with bullshit offers like that?

Wouldn't it be unfair to offer a deal that's significantly different in structure than the one that's offered to other types of knowledge workers?

Why would it be unfair to offer a different kind of pay structure? It's all about how much they have to pay to get employees.

Some people are willing to accept higher variance pay that has a higher expected value. That does not make them suckers, that just makes them less risk averse than you.

I am a motorcycle-riding, mountain-climbing, pyromaniac daredevil adventure-instigator whose friends would burst out into astonished guffaws if they heard you call me "risk averse". The key is that I choose risks where skill and training give me influence over the outcome. I will hurl myself into danger when I can be reasonably confident that I am capable of triumphing over it because I know what the variables are and how to bias them for success.

I have at various points in my life accepted 100% variance in pay by choosing to work freelance. It was an acceptable risk because I controlled not just the tech but also the nature of the business, and had reasonable confidence that I could make choices which would result in a satisfactory rate of return on my effort expended. Accepting employment as an engineer while also accepting the financial risk of other people's choices about how to run their business, choices you explicitly have no influence over?? That's not risk, that's an exploitation lottery.

That is a perfectly reasonable point of view for yourself and I totally get it.

But I would take a job with a 50% chance of making 200k and a 50% chance of making 100k over a job with a 100% chance of making 125k even if the outcome was determined by a coin flip. +EV is +EV whether I am responsible for the impact or not.

It makes sense when you put it that way. I guess the issue is not so much risk tolerance as cynicism. It is a negotiation where the information asymmetry does not favor me. The potential employer must be offering a variable compensation package with a claimed EV of $X because they believe their actual cost will be less than $X. Otherwise, why make it complicated? They'd just offer $X. I conclude that the only actual knowledge I have about the value of the offer is that it won't be lower than the base salary. I therefore accept the offer if the base salary is high enough to make the job worthwhile, and reject it otherwise. Any additional money which might happen to come along later I treat as a windfall; it has no incentive effect.

Otherwise, why make it complicated? They'd just offer $X.

The reason that this is done is because investment banks tend to have larger revenue swings than many other businesses. Due to this, they want to be able to more easily adjust their costs (of which people are a huge %) relatively easily. It's much easier to adjust bonuses up and down than base salaries.

That seems a little extreme. The reason they do bonuses is because in a bad year they can pay you 0.5x and in a good year 1.5x. You still get an average of x per year, but in such a way that they don't go out of business. Finance companies tend to see much larger revenue swings than other industries.

My current employer gets over this hurdle by guaranteeing your bonus for 1-2 years, thus giving them time to build trust before the variable compensation gets going.

Yes, if it really was a coin flip you'd be right. But that's not really reasonable - in the real world you can't know the odds like that.

If you think about what the company is saying, it's "If we fail at our business this year, we'll pay you less despite all your work." Even if that was only a 10% chance, meaning I'd statistically win, I wouldn't work there because they're looking to shit on me for their fuckups.

And it's far more likely that they'll specifically and intentionally defraud you by faking the performance metric, and reward themselves the bonus they "saved" by not paying you.

Your cynicism does not match up with the historical behavior of investment banks towards their employees. But yes, if you think this way you should definitely not ever go work for one.

In fact you probably shouldn't work with anyone else because whenever you do that your success is, at least in some ways, tied in with their success. Best to work alone all by yourself where you don't ever have to trust anyone else.

> And it's far more likely that they'll specifically and intentionally defraud you by faking the performance metric, and reward themselves the bonus they "saved" by not paying you.

Surely this would result in extremely high turnover? High turnover employers is probably something you want to avoid anyway, so I don't see this changing the equation much.

Unfortunately for your ego, that makes you risk adverse.

How can you know it's a sucker deal without knowing the numbers? $80k + a $10k bonus is bad, sure. But $50k + a $500k bonus is great even if you only get it once every 3-4 years (and as other comments point out the bonuses happen more often than not and are significant figures even relative to yearly compensation).

120-140K base with a 60-70K bonus was about where the average was for tech programmers. This is barely competitive in NY during the good years -- it sure as heck doesn't fly in bad years.

Quant technologists are a different beast. Like traders, they eat what they kill, and a 50/500 payout matrix may well make sense for them.

It's a sucker deal because they're offering not to tell you what the numbers are, and you have no meaningful way to influence them. You accept a share of their risk without gaining any compensating control over the outcome.

There are financial and regulatory reasons to structure it that way, even if you don't intend the bonus to vary much with firm or individual performance.

Financial first: deferring compensation from continuous throughout the year to a lump sum at the end is essentially getting your employees to lend you money. Depending on the implied terms of the loan (ie, how much extra you have to pay your employees in order to get them to agree to defer some of their compensation), it may be a better source of funding than issuing debt or equity. That's why banks and broker/dealers like the deferred bonus compensation model.

On the regulatory side, banks and broker/dealers are required to maintain a minimum amount of capital. Guaranteed bonuses would count as liabilities, reducing capital. Discretionary bonuses, however, don't have to be counted as a liability for regulatory capital purposes, so they don't reduce your regulatory capital. (They still count as liabilities under GAAP though.) That regulation is why they like to make them discretionary.

Disclaimer: regulatory capital definitely works like this for non-bank broker/dealers. Banks are subject to different rules, with which I am less familiar, but I would guess they work the same way with respect to discretionary compensation.

Even better for the company, if they fire someone even just before the end of the year -- no bonus at all for them. If they were to pay them the equivalent of the bonus in extra salary installments throughout the year, most of that money would be gone.

It's typically more expensive to replace somebody. And if there's no reason to fire you... why would they?

I've not been outright fired, but in every case where I got laid off the bonus was considered part of your compensation and paid.

> Financial first: deferring compensation from continuous throughout the year to a lump sum at the end is essentially getting your employees to lend you money.

Also, when the bonus comes in it is paid out in two portions - one immediately, and one six months later. This helps retention, since there is always a carrot for the employee to look forward to every six months.

The annual bonus is a lot more likely than a liquidity event for your stock options in your pre-IPO startup.

Think of it this way: would you rather get a 5-6 figure bonus most years, or a 6-7 figure stock option liquidity event in 3-7 years with a 95% probably of zero and you don't find out until after the 3-7 years have passed?

Fundamentally, they serve the same purpose, to tie compensation to company performance. But banks still expect to be around 50 years from now and earn profits the whole time, startups expect to take a big gamble on growth and then cash out in a big event and sort of change form. If you're a VC the latter is a pretty good deal because you only have to pay LT capital gains tax, not ordinary income; and obviously you're able to de-risk through diversification, unlike employees.

The bonus structure in banks is there so they can set salaries to be more like a percent of the company's revenue that year, except people refuse to accept salary decreases so they have to call it something else. If you compare it to pre-IPO stock options, it seems like it could be a lot less risky from the point of view of the employee.

What web browser were you using that let them access the camera without a confirmation popup?

Maybe GP globally enabled video recording access.

>" To my surprise the webcam turned on and started recording me (I was shirtless)"

Wow that is really invasive! There was no warning that you would be video recorded?

I am curios to what is the rationale behind needing to record potential candidates typing code on video?

I'm sure it was some sort of disclaimer (that I didn't read apparently). Like I said it was late at night when I opened the email and clicked the link with in. Still caught me off guard. I guess they record you to make sure you are doing the exercises

and if you don't have a webcam?

You are very correct in the worker bee interpretation of JPM's culture.

> To my surprise the webcam turned on and started recording me

What?

You can just scroll back up and read it again.

Nice reply, given your username :-)

"What?" for "this statements confounds and confuses me" is very different than "What?" for "I didn't hear you."

This difference can be very confusing in a lot of circumstances though. I wonder if perhaps a new word is needed.

A bank is using Angular 2?

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